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UP Regulator Eases Power Procurement From Exchanges For Industry
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he Uttar Pradesh Electricity Regulatory Commission, in its recent tariff order dated 29th July 21 for the financial year 2022 has made some key changes that could have a positive impact on the industry as well as renewable energy projects in the state. The regulator announced a reduction of up to 64 paise per unit in the cross-subsidy charges procuring power through Power Exchanges. That makes power procurement from exchanges that much more effective as compared to captive or other options. India Energy Exchange (IEX), the premier power exchange in the country, claims that today, over 75 consumers in Uttar Pradesh source electricity leveraging the Exchange platform. The competitive power prices have been helping industries optimize their
electricity procurement costs, thereby, leading to increased operational and financial efficiency since electricity contributes a major share of input costs for the industries. According to Rohit Bajaj, Head-Business Development & Senior Vice President at IEX, “IEX has been seeing significant participation from the open access consumers from the State of Uttar Pradesh. The reduction in cross-subsidy surcharge by the Uttar Pradesh Electricity Regulatory Commission (UPERC) for the open access consumers is a welcome and definitely a progressive step in ensuring industrial and economic growth in the State. All 1 MW and above industrial / commercial consumers can save almost upto Rs 1 per unit. This development enables the State industry to
significantly lower their operational costs and accelerate the overall economic growth of the State which is so critical in the COVID pandemic induced economic slowdown”. Introduction of GTAM (Green Term Ahead Market) has opened avenues for the development of the organized renewable energy market to provide an alternate market-based route to the RE generators to sell their green power and to the buyers to fulfil their RPO at competitive price with flexibility of entry and exit in the market. As states adopt policies to enable easier power trading, it is bound to support many renewable projects, including those that have been unable to tie-up power purchase agreements for their full capacity. Or those with surplus production during certain
Ministry Of Power Contests Fears Of 90K crore Discom Losses in FY 21
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he Ministry of power (MoP) challenges the concerns of 90K Crore Discom Losses Fy21. The Distribution Sector in India is termed as the most important, but also the weakest link in the Power Sector value chain. However, the Sector is also witnessing tell-tale signs of improvement in performance and increase in efficiencies due to a multitude of initiatives made by the Central & State Governments and the DISCOMs themselves. Or at least that’s what the Power Ministry would like stakeholders to note. In a release from the ministry, as per the Audited Annual Accounts of Power Distribution Utilities, DISCOMs have shown an improvement in their operational and financial performance over the past few years: • The Aggregate Technical &
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Commercial (AT&C) losses have come down from 23.5% in FY 2016-17 to 21.83% in FY 2019-20. • The gap between average cost of supply (ACS) and average revenue realised (ARR) narrowed down to Rs 0.28/kWh in 2019-20 from Rs 0.33/kWh in 2016-17. • The annual Profit After Tax (PAT) figures being negative have also shown
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improvement from Rs.33,894 Cr in FY 2016-17 to Rs.32,898 Cr in FY 2019-20. The release is in response to reports that have published speculations regarding DISCOMs achieving loss levels of Rs 90,000 crore in FY2021. These speculations trace their origins to a report published by ICRA on the Power Distribution Sector in March, 2021. While
this report indicates Profit After Tax (PAT) figures of negative ~Rs 50,000 crore in FY19 (which is consistent with the PFC’s Annual Utilities report of FY 2019), the projections of PAT figures of FY 2020 are shown to increase to the tune of negative ~Rs 60,000 crores. This report further builds on these losses and projects total DISCOM losses of ~Rs 90,000 crore in FY2021. One of the reasons ascribed to this speculation is the decline in electricity volume sales in the year 2020-21 due to the COVID induced lockdown. This report also mentions ~Rs 30,000 crore increase in DISCOM dues to its creditors from March, 2020 to December, 2020, and perhaps assumes this increase in payables, which is essentially a cash flow problem, to directly reflect into additional DISCOM losses in FY 2021 over the projections of FY2020.
